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The mighty Microsoft released excellent results on Tuesday night. The market liked what it saw, and the stock rose in a very weak market yesterday. Revenues beat guidance by 3.5%, thanks to some great numbers from the powerhouse cloud service, Azure.
Expectations for 2024 earnings are now at around $11.32 per share. The stock trades at 29 times earnings which I believe is cheap for a company growing at 15% per annum and a net cash position $77 billion. Between cloud computing, Office365 and gaming they have the most incredible annuity income.
One might ask how they will maintain such good growth in the years ahead? Step up AI. Microsoft is the first mega-cap to properly launch their AI products commercially, called Microsoft Copilot. Copilot bolsters source code writing (GitHub) productivity by 55% and already has 37 000 paying customers. App creation and data analytics, called Power Platform, has 126 000 customers. M365 Copilot is launching on 1 November and should be huge. 365 already has 400 million monthly active users. According to Goldman Sachs, AI services have contributed 3% to the company's growth this quarter.
The future is very bright for this tech giant and we believe it's a bargain at current share price levels. This should be one of the biggest holdings in your portfolio.
